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Ford Vietnam’s tax arrears collection: it’s to blame on policies

Not only Ford Vietnam, but Toyota Vietnam and some other automobile manufacturers are also facing the accusation of evading tax, and may have to pay tax arrears totaling up to one trillion dong. How will the case be settled?

Not only Ford Vietnam, but Toyota Vietnam and some other automobile manufacturers are also facing the accusation of evading tax, and may have to pay tax arrears totaling up to one trillion dong. How will the case be settled?

Tien phong reporting, when learning about the facts, said that in June 2011 alone, Deputy Minister of Finance Do Hoang Anh Tuan, released two legal documents with contradictory instructions on the same issue: how to deal with Ford Vietnam.

On June 1, Tuan signed the Decision No 7116, which said that if customs agencies discover that the sets of import car parts have at least one car part which cannot meet the separation level, as stipulated in the Decision No 05 by the Ministry of Science and Technology, they need to impose the tax rates applied to the imports under the mode of complete built units (CBU). Customs agencies can also collect tax arrears as per the current laws.

However, just 20 days later, in the Dispatch No 8118, Tuan decided to allow the importers to get customs clearance, while no coercion measure needs to be taken.

Tien phong has asked Tuan why.

Why did you give different instructions in the two legal documents?

The Hai Duong Customs Sub-agency did not agree with the tax declarations by Ford Vietnam about the hundreds of sets of car parts, believing that the importer made wrong declarations. Not only Ford Vietnam, but other car assembling joint ventures–namely Toyota, Vidamco, the Automobile Corporation and three other enterprises in HCM City are also facing the same problem.

In fact, the tax arrears that customs agencies need to collect from the automobile manufacturers are not only hundreds of billion of dong, but the sum could be one trillion dong.

The problem here is that the policies in Vietnam are not consistent and updated. One should not try to define who is right; enterprises, or customs agencies.

After discussing with the Ministry of Finance, and after the Ministry of Science and Technology asked to follow the currently valid laws, I signed the Decision No 7116.

However, later, the importers lodged a complaint about the case to relevant ministries and branches, while the US Embassy also had a working session with the Government on Ford’s issue.

The Ministry of Science and Technology (MST) has checked some cases. It found out that Ford Vietnam imported 200 sets of car parts with the characteristics coming in line with the Decision 05 on the separation level of car parts. There was only one thing: the exhaust pipe in Decision 05 has two pieces, while the importers have three.

MST, in the document sent to the Ministry of Finance, said that it is now the right time to amend the Decision 05.

Therefore, I signed the Decision No 8118 on allowing the importer to get customs clearance to ensure the normal production of the enterprise. Our ministry has also agreed that the Decision 05 needs amendment.

The Decision 05 has become out of date. However, it still has its validity. What would you say about that?

In this case, problems have arisen in four kinds of car parts. The exhaust pipe, for example, needs to have three pieces in order to ensure the separation level as stipulated in Decision 05. However, in the world now, pipes just need two pieces.

I think that it would be unreasonable if we just consider this in making the decision to apply the tax rate of 83 percent, as on CBU cars. It is really necessary to amend our legal documents to get updated with the changes in the world’s technologies. What will happen if the Decision 05 is amended? Will importers have to pay tax arrears due to the tax gap?

I understand that enterprises have to suffer just because of a small detail. It has been reported that Ford Vietnam’s production has been stagnant for 7 days, because of the tardiness in customs clearance.

While waiting for MST to make a decision, the Ministry of Finance needs to clear the imports and keep the tax arrears hung. The Prime Minister will decide whether to collect tax arrears.